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Well, "game development" is a bit of a blanket term. It depends on what kind of game development. Are we talking about 2D casual games? Or full-blown AAA titles?

It looks to me as if your machine has an onboard graphics card, and a processor that clocks below a GHz. Your RAM's okay, but really, it's pretty useless if you're planning on developing Doom III. Now, if you want to make something less intensive, then sure, yeah, it should do you decently, albeit a little slowly. But don't expect miracles.

EDIT: Actually upgrade that thing to 1GB RAM on purchase, as I see the 512MB is really 2x256 which might eat all your DDR slots which would mean you would have to replace that RAM for 2x512 and throw away those current ones.